THE TRANSFER OF THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON
EXERCISE HEREOF IS SUBJECT TO CERTAIN RESTRICTIONS CONTAINED IN
PARAGRAPH 10 HEREOF, AND THE HOLDER OF THIS WARRANT BY ACCEPTANCE
HEREOF AGREES TO BE BOUND BY SUCH RESTRICTIONS.
COMMON SHARE PURCHASE WARRANT
TO SUBSCRIBE FOR AND PURCHASE COMMON SHARES OF
LEUCADIA NATIONAL CORPORATION
WARRANT TO PURCHASE 400,000 COMMON SHARES
THIS CERTIFIES that, for value received,
INSERT NAME OF EXECUTIVE
(the "Executive") is entitled to subscribe for and purchase from LEUCADIA
NATIONAL CORPORATION, incorporated under the laws of the State of New York
(hereinafter called the "Company"), at the price of $23.95 share (the "initial
warrant purchase price"), four hundred thousand (400,000) fully paid and
nonassessable Common Shares, $1 par value, of the Company ("Common Shares"),
subject, however, to the provisions and upon the terms and conditions
hereinafter set forth. The initial warrant purchase price and the number and
character of the shares with respect to which this Warrant is exercisable are
subject to adjustment as hereinafter provided.
1. Exercise; Termination; Penalty; Issuance of Certificates; Payment
for Shares.
1A. (1) Unless a Termination (defined below) shall have occurred,
the rights represented by this Warrant may be exercised by the holder
hereof, in whole or in part (but not as to a fractional Common Share),
at any time or from time to time on or after the date of this Warrant,
until 5:00 p.m. New York City time on May 15, 2005. In the event a
Termination shall occur after the date of this Warrant and prior to May
16, 2001 (the "first anniversary date"), upon exercise of this Warrant
by the holder hereof at any time, the Executive shall pay to the
Company in connection therewith, in addition to the initial warrant
purchase price to be paid by the holder of this Warrant (as such
initial warrant purchase price may be adjusted under the terms of this
Warrant), the product of (x) the difference between the closing price
of a Common Share on the date immediately prior to either (a) the date
of exercise or (B) the date of Termination (whichever results in a
higher closing price) minus the initial warrant purchase price (as such
initial warrant purchase price may be adjusted under the terms of this
Warrant) multiplied by (y) the number of Common Shares to be issued
upon such exercise.
(2) In addition, in the event a Termination shall occur
after the first anniversary date and prior to May 16, 2002 (the "second
anniversary date"), upon exercise of this Warrant by the holder hereof
at any time, the Executive shall pay to the Company in connection
therewith, in addition to the initial warrant purchase price (as such
initial warrant purchase price may be adjusted prior to the term of
this Warrant), the product of (x) the difference between the closing
price of a Common Share on the date immediately prior to either (A) the
date of exercise or (B) the date of Termination (whichever results in a
NY2:\953768\01\KFXK01!.DOC\76830.0198
<PAGE>
higher closing price) minus the initial warrant purchase price to be
paid by the holder of this Warrant (as such initial warrant purchase
price may be adjusted under the terms of this Warrant) multiplied by
(ii) fifty percent (50%) of the number of Common Shares to be issued
upon such exercise.
(3) In the event a Termination shall occur at any time
after the second anniversary date, upon exercise of this Warrant by the
holder hereof at any time, the holder of the Warrant shall be obligated
to pay to the Company in connection therewith only the initial warrant
purchase price (as such initial warrant purchase price may be adjusted
prior to the term of this Warrant) and the Executive shall not be
obligated to pay any additional amounts to the Company in respect of
such exercise.
(4) In the event that the Board of Directors or the Option
Committee of the Board of Directors accelerates vesting of all
outstanding stock options issued under any stock option plan of the
Company pursuant to the terms thereof, the penalty described in
subparagraph (1) and (2) above shall not apply if a Termination occurs
after such acceleration of vesting of stock options.
1B. "Termination" for purposes hereof shall mean either (1) the
voluntary termination by the Executive of his employment with the
Company, or (2) the discharge of the Executive from such employment for
"cause." "Cause" is defined as the commission by the Executive of any
act of gross negligence in the performance of his duties or obligations
to the Company or any of its subsidiary or affiliated companies, or the
commission by the Executive of any material act of disloyalty,
dishonesty or breach of trust against the Company or any of its
subsidiary or affiliated companies.
1C. The rights may be so exercised by such holder hereof by the
surrender of this Warrant (with the Subscription Agreement annexed
hereto appropriately completed) to the Company at its offices at 315
Park Avenue South, New York, New York (or such other office or agency
of the Company in New York, New York, as it may designate by notice in
writing to the holder hereof at the address of such holder appearing on
the books of the Company at any time within the period above named) and
upon payment to it, for the account of the Company, of the purchase
price for such shares.
1D. The Company agrees that the shares so purchased shall be
deemed to have been issued to the holder hereof as the record owner of
such shares immediately after the close of business on the date on
which this Warrant shall have been surrendered and delivery of payment
for such shares shall have been made as aforesaid. Subject to the
provisions of the next succeeding paragraph, certificates for the
shares so purchased shall be delivered to the holder hereof promptly
after such surrender and delivery, and, unless this Warrant shall have
expired, a new Warrant representing the number of shares, if any, with
respect to which this Warrant shall not then have been exercised shall
also be delivered to the holder hereof.
2. Agreement of Holder. The holder of this Warrant, by his
acceptance hereof, represents that he is acquiring this Warrant, and will
acquire the Common Shares issuable upon any exercise of this Warrant by such
holder, for his own account for investment and not with a view to the
distribution thereof or with any present intention of selling any thereof,
except for a sale of such Common Shares in compliance with the provisions of the
Securities Act of 1933, as amended, and the rules and the regulations
thereunder.
2
<PAGE>
3. Shares to be Fully Paid. Reservation of Shares. All shares
issued upon the exercise of the rights represented by this Warrant shall be
validly issued, fully paid and nonassessable (except as otherwise provided in
Section 630 of the New York Business Corporation Law) and free from all taxes,
liens and charges with respect to the issue thereof (other than taxes in respect
of any transfer occurring contemporaneously with such issue). The Company shall
from time to time take all such action as may be requisite to assure that the
par value per Common Share is at all times equal to or less than the warrant
purchase price per share then in effect. During the period within which the
rights represented by this Warrant may be exercised, the Company shall at all
time have authorized, and reserved for the purpose of issuance or transfer upon
exercise of the rights evidenced by this Warrant, a sufficient number of Common
Shares to provide for the exercise of the rights represented by this Warrant.
The Company shall take all such action as may be necessary to assure that such
Common Shares may be so issued without violation of any applicable law or
regulation, or of any requirements of any domestic securities exchange upon
which the Common Shares of the Company may be listed. The Company shall not take
any action which would result in any adjustment of the warrant purchase price if
the total number of Common Shares issuable after such action upon exercise of
all Warrants then outstanding would exceed the total number of then authorized
but unissued Common Shares.
4. Adjustments. The above provisions are, however, subject to the
following:
4A. Warrant Purchase Price Defined. The initial warrant purchase
price set forth in the initial paragraph of this Warrant shall be
subject to adjustment from time to time as hereinafter provided. The
term "warrant purchase price" shall mean, unless and until any such
adjustment shall occur, the initial warrant purchase price and, after
any such adjustment, the warrant purchase price resulting from such
adjustment.
4B. Adjustment of Number of Shares. Upon each adjustment of the
warrant purchase price, the holder of this Warrant shall thereafter be
entitled to purchase, at the warrant purchase price resulting from such
adjustment, the number of Common Shares obtained by multiplying the
warrant purchase price in effect immediately prior to such adjustment
by the number of shares purchasable pursuant hereto immediately prior
to such adjustment and dividing the product thereof by the warrant
purchase price resulting from such adjustment.
4C. Adjustment of Warrant Purchase Price Upon Issuance of Common
Shares. If and whenever after the date hereof the Company shall issue
or sell any Common Shares without consideration or for a consideration
per share less than the warrant purchase price in effect immediately
prior to the time of such issue or sale, then, and in each such case,
forthwith upon such issue or sale, the warrant purchase price shall be
reduced to a price (calculated to the nearest cent) determined by
dividing (i) an amount equal to the sum of (X) the number of Common
Shares outstanding immediately prior to such issue or sale multiplied
by the then existing warrant purchase price, plus (Y) the
consideration, if any, received by the Company upon such issue or sale,
by (ii) the total number of Common Shares outstanding immediately after
such issue or sale. No adjustment shall be made in an amount less than
$.05 per share, but any such lesser adjustment shall be carried forward
and shall be made at the time and together with the next subsequent
adjustment which together with any adjustments so carried forward shall
amount to $.05 per share or more. For the purposes of this paragraph
4(C), the following provisions (1) to (6), inclusive, shall also be
applicable:
(1) Issuance of Rights or Options. In case at any time the
Company shall in any manner grant (whether directly or by
assumption in a merger or otherwise) any rights to subscribe for
3
<PAGE>
or to purchase, or any options for the purchase of, Common
Shares, whether or not such rights or options are immediately
exercisable, and the price per share for which Common Shares are
issuable upon the exercise of such rights or options (determined
by dividing (i) the total amount, if any, received or receivable
by the Company as consideration for the granting of such rights
or options, plus the minimum aggregate amount of additional
consideration payable to the Company upon the exercise of such
rights or options by (ii) the total maximum number of Common
Shares issuable upon the exercise of such rights or options)
shall be less than the warrant purchase price in effect
immediately prior to the time of the granting of such rights or
options, then the total maximum number of Common Shares issuable
upon the exercise of such rights or options shall (as of the date
of granting of such rights or options) be deemed to be
outstanding and to have been issued for such price per share. No
further adjustments of the warrant purchase price shall be made
upon the actual issue of such Common Shares, except as otherwise
provided in paragraph 4C(2).
(2) Changes in Rights or Options. If the purchase price
provided for in any rights or options referred to in paragraph
4C(1) shall change at any time (other than under or by reason of
provisions designed to protect against dilution), the warrant
purchase price in effect at the time of such event shall
forthwith be readjusted to the warrant purchase price which would
have been in effect at such time had such rights or options still
outstanding provided for such changed purchase price at the time
initially granted, issued or sold. Upon the expiration of any
such option or right, the warrant purchase price then in effect
hereunder shall forthwith be increased to the warrant purchase
price which would have been in effect at the time of such
expiration had such right or option to the extent outstanding
immediately prior to such expiration never been issued and the
Common Shares issuable thereunder shall no longer be deemed to be
outstanding; provided, however, that no such increase in the
warrant purchase price shall be made in an amount in excess of
the amount of the adjustment thereof initially made in respect of
the granting of such rights or options. If the purchase price
provided for in any such right or option referred to in paragraph
4C(1) shall be reduced at any time under or by reason of
provisions with respect thereto designed to protect against
dilution, then in case of the delivery of Common Shares upon the
exercise of any such right or option the warrant purchase price
then in effect hereunder shall forthwith be adjusted to such
respective amount as would have been obtained had such right or
option never been issued as to such Common Shares and had
adjustments been made upon the issuance of the Common Shares
delivered as aforesaid, but only if as a result of such
adjustment the warrant purchase price then in effect hereunder is
thereby reduced.
(3) Stock Dividends. In case the Company shall declare a
dividend or make any other distribution upon any shares of the
Company payable in Common Shares, any Common Shares issuable in
payment of such dividend or distribution shall be deemed to have
been issued or sold without consideration.
(4) Consideration for Shares. In case any Common Shares or
any rights or options to purchase Common Shares shall be issued
or sold for cash, the consideration received therefor shall be
deemed to be the amount received by the Company therefor, after
deduction therefrom of any expenses incurred or any underwriting
commissions or concessions paid or allowed by the Company in
connection therewith. In case any Common Shares or any rights or
4
<PAGE>
options to purchase Common Shares shall be issued or sold for a
consideration other than cash, or partly for cash and for a
consideration other than cash, the amount of the consideration
other than cash received by the Company shall be deemed to be the
lesser of (i) the fair market value on the issue date of the
securities so issued by the Company, after deduction of any
expenses incurred or any underwriting commissions or concessions
paid or allowed by the Company in connection therewith, or (ii)
the fair value of such consideration as determined in good faith
by the Board of Directors of the Company after deduction of any
such expenses. In case any Common Shares or any rights or options
to purchase Common Shares shall be issued in connection with any
merger in which the Company issues any securities, the amount of
consideration therefor shall be deemed to be the fair value as
determined in good faith by the Board of Directors of the Company
of such portion of the assets and business of the non-surviving
corporation as such Board in good faith shall determine to be
attributable to such Common Shares, or rights or options, as the
case may be. In the event of any consolidation or merger of the
Company in which the Company is not the surviving corporation or
in the event of any sale of all or substantially all of the
assets of the Company for shares or other securities of any
corporation, the Company shall be deemed to have issued a number
of Common Shares for shares or securities of the other
corporation computed on the basis of the actual exchange ratio on
which the transaction was predicated and the consideration
received from such issuance shall be equal to the fair market
value on the date of such transaction of such shares or
securities of the other corporation, and if any such calculation
results in adjustment of the warrant purchase price, the
determination of the number of Common Shares receivable upon
exercise of this Warrant immediately prior to such merger,
conversion or sale, for purposes of paragraph 4F shall be made
after giving effect to such adjustment of the warrant purchase
price.
(5) Record Date. In case the Company shall take a record of
the holders of its Common Shares for the purpose of entitling
them (i) to receive a dividend or other distribution payable in
Common Shares, or (ii) to subscribe for or purchase Common
Shares, then such record date shall be deemed to be the date of
the issue or sale of the Common Shares deemed to have been issued
or sold upon the declaration of such dividend or the making of
such other distribution or the date of the granting of such right
of subscription or purchase, as the case may be.
(6) Treasury Shares. The number of Common Shares
outstanding at any given time shall not include shares owned or
held by or for the account of the Company, and the disposition of
any such shares shall be considered an issue or sale of Common
Shares for the purposes of this paragraph 4(C).
4D. Dividends and Distributions. If the Company shall at any time
declare a dividend or make a distribution in respect of its Common
Shares, the warrant purchase price in effect immediately prior to the
declaration of such dividend or the making of such distribution shall
be reduced by an amount equal, in the case of a dividend or
distribution in cash, to the amount thereof payable per Common Share
or, in the case of any other dividend distribution, to the fair value
thereof per Common Share as determined in good faith by the Board of
Directors of the Company; provided that no adjustment under this
paragraph 4(D) shall be required in the case of a cash dividend payable
out of earnings or surplus and otherwise than in securities of the
Company unless such cash dividend is a special dividend as determined
in good faith by the Board of Directors of the Company. If the Company
shall at any time declare a dividend or make a distribution in respect
5
<PAGE>
of its Common Shares in securities of the Company other than Common
Shares, the holder of this Warrant shall be entitled to receive upon
exercise of this Warrant such securities as such holder would have been
entitled to receive had this Warrant been exercised immediately prior
to such dividend or distribution. For the purposes of the foregoing, a
dividend in cash shall be considered payable out of earnings or surplus
only to the extent that such earnings or surplus are charged an amount
equal to such dividend as determined by the Board of Directors of the
Company. Such reductions shall take effect as of the date on which a
record is taken for the purpose of such dividend or distribution, or,
if a record is not taken, the date as of which the holders of Common
Shares of record entitled to such dividend or distribution are to be
determined.
4E. Subdivision or Combination of Shares. In case the Company
shall at any time subdivide its outstanding Common Shares into a
greater number of shares or pay a dividend or other distribution upon
any shares of the Company payable in Common Shares, the warrant
purchase price in effect immediately prior to such subdivision or
payment date shall be proportionately reduced. In case the outstanding
Common Shares of the Company shall be combined into a smaller number of
shares, the warrant purchase price in effect immediately prior to such
combination shall be proportionately increased.
4F. Reorganization, Reclassification, Consolidation, Merger or
Sale. If any capital reorganization or reclassification of the capital
shares of the Company, any consolidation or merger of the Company with
another corporation, or any sale of all or substantially all of the
assets of the Company to another corporation shall be effected in such
a way that holders of Common Shares shall be entitled to receive stock,
securities or assets with respect to or in exchange for Common Shares,
then, as a condition of such reorganization, reclassification,
consolidation, merger or sale, lawful and adequate provision shall be
made whereby the holder hereof shall thereafter have the right to
purchase and receive, upon the basis and upon the terms and conditions
specified in this Warrant and in lieu of the Common Shares of the
Company immediately theretofore purchasable and receivable upon the
exercise of the rights represented hereby, such shares of stock,
securities or assets as may be issued or payable with respect to or in
exchange for a number of outstanding Common Shares equal to the number
of shares immediately theretofore purchasable and receivable upon the
exercise of the rights represented hereby had such reorganization,
reclassification, consolidation, merger or sale not taken place, and in
any such case appropriate provision shall be made with respect to the
rights and interest of the holder of this Warrant to the end that the
provisions hereof (including without limitation provisions for
adjustments of the warrant purchase price and of the number of shares
purchasable and receivable upon the exercise of this Warrant) shall
thereafter be applicable, as nearly as may be, in relation to any
shares of stock, securities or assets thereafter deliverable upon the
exercise hereof. The Company will not effect any such consolidation,
merger or sale unless prior to the consummation thereof the successor
corporation (if other than the Company) resulting from such
consolidation or merger or the corporation purchasing such assets shall
assume by written instrument, executed and mailed or delivered to, and
in form and substance satisfactory to, the registered holder hereof
(who shall not unreasonably withhold his approval) at the last address
of such holder appearing on the books of the Company, (i) the
obligation to deliver to such holder such shares of stock, securities
or assets as, in accordance with the foregoing provisions, such holder
may be entitled to purchase, and (ii) all other obligations of the
Company under this Warrant.
6
<PAGE>
4G. Notice of Adjustments. Upon each adjustment or readjustment
of the warrant purchase price or in the nature of the Common Shares,
securities or other property receivable upon the exercise of this
Warrant, the Company at its expense will promptly compute such
adjustment or readjustment in accordance with the terms of this Warrant
and prepare a certificate setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or
readjustment is based. The Company shall forthwith mail a copy of each
such certificate addressed to the holder of this Warrant at the address
of such holder as shown on the books of the Company.
4H. Other Notices. In case at any time:
(1) the Company shall declare any dividend upon its Common
Shares payable in shares or authorize any other distribution
(other than regular cash dividends) to the holders of its Common
Shares;
(2) the Company shall offer for subscription pro rata to
the holders of its Common Shares any additional shares of any
class or other rights;
(3) there shall be any capital reorganization, or
reclassification of the capital shares of the Company (other than
a transaction covered by paragraph 4F), or consolidation or
merger of the Company with, or sale of all or substantially all
of its assets to, another corporation; or
(4) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of said cases, the Company shall give, by
first class mail, postage prepaid, addressed to the holder of this
Warrant at the address of such holder as shown on the books of the
Company, (a) at least 20 days' prior written notice of the date on
which the books of the Company shall close or a record shall be taken
for such dividend, distribution of subscription rights or for
determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation
or winding up, and (b) in the case of such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation
or winding up, at least 20 days' prior written notice of the date when
the same shall take place. Such notice in accordance with the forgoing
clause (a) shall also specify, in the case of any such dividend,
distribution or subscription rights, the date on which the holders of
Common Shares shall be entitled thereto, and such notice in accordance
with the foregoing clause (b) shall also specify the date on which the
holders of Common Shares shall be entitled to exchange their Common
Shares for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, as the case may be.
4I. Certain Events. If any event occurs, as to which, in the
opinion of the Board of Directors of the Company, the other provisions
of this paragraph 4 are not strictly applicable or if strictly
applicable would not fairly protect the purchase rights of this Warrant
in accordance with the essential intent and principles of such
provisions, then the Board of Directors shall make an adjustment in the
application of such provisions, in accordance with such essential
intent and principles, so as to protect such purchase rights as
aforesaid, but in no event shall any such adjustment have the effect of
increasing the warrant purchase price as otherwise determined pursuant
to this Paragraph 4 except in the event of a combination of shares of
7
<PAGE>
the type contemplated in paragraph 4E and then in no event to an amount
larger than the warrant purchase price as adjusted pursuant to
paragraph 4E.
5. Issue Tax. The issuance of certificates for Common Shares upon the
exercise of this Warrant shall be made without charge to the holders hereof for
any issuance tax in respect thereof, and all such issuance taxes shall be paid
or provided for by the Company prior to the issuance of such certificates.
6. No Voting Rights. This Warrant shall not entitle the holder hereof
to any voting rights or other rights as a shareholder of the Company.
7. Listing of Shares. The Company agrees to use its best efforts to
secure, as soon as practicable after the date hereof, the listing of the Common
Shares issuable upon the exercise of this Warrant, subject to official notice of
issuance, on the New York Stock Exchange, Inc.
8. Warrant Transferable; Registration Books. Subject to the
provisions of paragraph 10, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office of the Company referred to in
paragraph 1 by the holder hereof in person or by duly authorized attorney, upon
surrender of this Warrant properly endorsed. Each taker and holder of this
Warrant, by taking or holding the same, consents and agrees that this Warrant,
when endorsed in blank, shall be deemed negotiable, and that the holder hereof,
when this Warrant shall have been so endorsed, may be treated by the Company and
all other persons dealing with this Warrant as the absolute owner hereof for any
purpose and as the person entitled to exercise the rights represented by this
Warrant, or to the transfer hereof on the books of the Company, any notice to
the contrary notwithstanding; but until such transfer on such books, the Company
may treat the registered holder hereof as the owner for all purposes.
The Company shall keep or cause to be kept, at its offices (or the
office of its agents) in New York, New York, proper books in which the names and
addresses of the initial holder of this Warrant and all subsequent transferees
shall be registered.
9. Warrant Exchangeable; Loss, Theft, Destruction, Etc. This Warrant
is exchangeable, upon the surrender hereof by the holder hereof at the office of
the Company referred to in paragraph 1, for a new Warrant or new Warrants of
like tenor representing in the aggregate the right to subscribe for and purchase
the number of Common Shares which may be subscribed for and purchased hereunder,
each such new Warrant to represent the right to subscribe for and purchase such
number of Common Shares as shall be designated by such holder hereof at the time
of such surrender. Upon receipt of evidence satisfactory to the Company of the
loss, theft, destruction or mutilation of this Warrant and, in the case of any
such loss, theft or destruction, upon delivery of a bond or indemnity
satisfactory to the Company, or, in the case of any such mutilation, upon
surrender or cancellation of this Warrant, the Company will issue to the holder
hereof a new Warrant of like tenor, in lieu of this Warrant, representing the
right to subscribe for and purchase the number of Common Shares which may be
subscribed for and purchased hereunder.
10. Limitations on Transferability; Securities Act Compliance,
Registration.
10A. Definitions. As used in this paragraph 10, the
following definitions shall be applicable:
"Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the
federal securities laws.
8
<PAGE>
"Company Securities" means (i) shares of common stock of
the Company, (ii) shares of preferred stock of the Company, (iii)
warrants, rights, or options (within the meaning of Treasury
Regulation ss.1.382-2T(h)(4)(v)) to purchase stock of the Company,
and (iv) any other interests that would be treated as "stock" of the
Company pursuant to Treasury Regulation ss.1.382-2T(f)(18).
"Maximum Includable Shares" shall mean the maximum number
of Common Shares (including, for this purpose, the number of Common
Shares issuable upon exercise of Restricted Securities for which
registration is requested pursuant to paragraph 10E(1) to be offered
by selling security holders in a firm commitment underwriting that
the managing underwriter or underwriters (the "Managing
Underwriters") of the proposed offering, in their good faith
judgment, deem it practicable and consistent with the best interests
of the Company to offer and sell, upon the effectiveness of the
Registration Statement. In making such judgment, the Managing
Underwriters shall take into account, among other things, (i) any
adverse effect on the price or terms upon which the securities
included in such Registration Statement for the account of the
Company may be sold, and (ii) any adverse effect on the price or
terms upon which all securities included in such Registration
Statement for the account of the Company and the selling security
holders may be sold.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"Prospectus" shall mean any preliminary prospectus and
final prospectus (as such may be amended or supplemented) which
constitutes Part I of a Registration Statement filed with the
Commission.
"Registration Statement" shall mean the form and documents
required to be filed by an issuer in connection with the registration
of securities of such issuer under the Securities Act.
"Restricted Securities" shall mean (i) this Warrant (and
any warrant or warrants issued in exchange therefor or in replacement
thereof) and (ii) the Common Shares issued or issuable upon exercise
of this Warrant or such other warrants; the certificates for all of
which bear the legend referred to in paragraph 10B.
"Restricted Shares" shall mean the Common Shares issued or
issuable upon exercise of Restricted Securities bearing the legend
referred to in paragraph 10B.
"Securities Act" shall mean the Securities Act of 1933, as
amended from time to time.
"Seller" shall mean each holder of Restricted Securities or
Restricted Shares for whom securities are included or proposed to be
included in a Registration Statement filed or proposed to be filed by
the Company.
"transfer" shall mean any sale, pledge, assignment,
encumbrance or disposition of any Restricted Securities or of any
part thereof or interest therein, including an offer to transfer,
whether or not such transfer would constitute a "sale" as that term
is defined in section 2(3) of the Securities Act. For purposes of
obtaining approval by the Board of Directors pursuant to Part III of
Article Fourth of the Company's Certificate of Incorporation,
"Transfer" shall mean any direct or indirect sale, transfer,
assignment, conveyance, pledge, or other disposition. A Transfer also
shall include the creation or grant of an option (within the meaning
9
<PAGE>
of Treasury Regulation ss.1.382-2T(h)(4)(v)). A Transfer shall not
include an issuance or grant of Company Securities by the Company.
"Treasury Regulation ss.1.382-2T" means the temporary
income tax regulations promulgated under Section 382, and any
successor regulations. References to any subsection of such
regulations include references to any successor subsection thereof.
10B. Legends.
(1) Unless and until removed as provided in the next
paragraph, this Warrant (and any Warrants issued in
exchange herefor or replacement hereof) and each
certificate evidencing Common Shares issued upon exercise
of this Warrant shall bear a legend in substantially the
following form:
In the case of this Warrant: "The
transfer of this Warrant and the Common Shares
issuable upon exercise hereof is subject to
certain restrictions contained in paragraph 10
hereof, and the holder of this Warrant by
acceptance hereof agrees to be bound by such
restrictions."
In the case of Common Shares: "The
transfer of this certificate and the shares
evidenced hereby is subject to certain
restrictions contained in paragraph 10 of a
Common Share Purchase Warrant dated May 16, 2000,
and the holder of this certificate by acceptance
hereof agrees to be bound by such restrictions. A
copy of such Warrant is on file with the
Secretary of the Company."
The Company may issue such "stop
transfer" instructions to its transfer agent with
respect to all or any of the Restricted
Securities as it deems appropriate to prevent any
violation of the provisions of this paragraph 10
or of the Securities Act.
(2) The Company shall issue a new Warrant or
certificate which does not contain the legend set forth in
paragraph 10B(1) if (i) the shares represented thereby are
sold pursuant to a Registration Statement (including a
current Prospectus) which has become and is effective under
the Securities Act or (ii) the staff of the Commission
shall have issued a "no action" letter to the effect that,
or counsel acceptable to the Company shall have rendered
its opinion (which opinion shall be acceptable to the
Company) that, such securities may be sold without
registration under the Securities Act.
(3) At the time of any exercise of this Warrant, the
Company may require, as a condition of allowing such
exercise, that the holder of this Warrant furnish to the
Company such information as, in the opinion of the Company,
is reasonably necessary in order to establish that such
exercise is made in compliance with the registration
requirements of the Securities Act or may be made without
registration under the Securities Act, including without
limitation a written statement that such holder is
acquiring the security receivable upon such exercise for
its own account for investment and not with a view to the
distribution thereof or with any present intention of
selling any thereof; provided, however, that nothing
contained in this paragraph 10B(3) shall impair the
registration obligations of the Company specified in the
succeeding provisions of this paragraph 10.
10
<PAGE>
(4) Unless and until removed as provided in Part III
of Article Fourth of the Company's Certificate of
Incorporation, this Warrant (and any Warrants issued in
exchange herefor or replacement hereof) and each
certificate evidencing Common Shares issued upon exercise
of this Warrant shall bear a legend in substantially the
following form:
In the case of this Warrant: "The
transfer of this Warrant and the Common Shares
issuable upon exercise hereof is subject to
restrictions pursuant to Part III of Article
Fourth of the Certificate of Incorporation of
Leucadia National Corporation reprinted in its
entirety on Appendix 1 of this Warrant."
In the case of Common Shares: "The
transfer of the Securities represented hereby is
subject to restrictions pursuant to Part III of
Article Fourth of the Certificate of
Incorporation of Leucadia National Corporation
reprinted in its entirety on the back of this
Certificate."
10C. Notice of Transfer; Opinion of Counsel. If a holder of
Restricted Securities proposes to transfer all or a portion of such
securities, such holder shall give the Company written notice
specifying the securities involved and describing the manner in which
the proposed transfer is to be made, together with either (i) an
opinion satisfactory to the Company or counsel satisfactory to the
Company stating in substance that registration under the Securities
Act is not required with respect to such transfer or (ii) a "no
action" letter from the staff of the Commission with respect to such
transfer. Following delivery of a notice accompanied by an opinion of
counsel to the effect set forth above or by such a "no action"
letter, such holder shall have the right to transfer, in a manner
consistent with its notice to the Company, the Restricted Securities
proposed to be transferred, provided that the holder has complied
with the provisions of Part III of Article Fourth of the Company's
Certificate of Incorporation, if applicable, unless the Company
determines within 20 days following such delivery that registration
under the Securities Act is required with respect to such proposed
transfer or that such transfer would violate the provisions of such
Part III of Article Fourth. Such holder shall cooperate with the
Company for the purpose of permitting such determination to be made,
including, to the extent deemed necessary by the Company, procuring
and delivering to the Company an investment letter signed by the
proposed transferee.
10D. Demand Registration.
(1) Upon a written demand by a holder or holders of at
least 200,000 Restricted Shares (or such other equivalent
number of shares as may result from a reclassification,
subdivision or combination of Common Shares into a greater
or smaller number of shares) that not less than 200,000 of
such Restricted Shares be registered (which demand shall
specify its intended method of disposition), the Company
shall promptly give written notice of such demand to all
other holders of Restricted Securities and shall use its
best efforts to effect the registration under the
Securities Act of:
(a) the Restricted Shares which the Company has been
demanded to register pursuant to this paragraph 10D for a
disposition in accordance with the proposed method of
disposition described in said demand; and
11
<PAGE>
(b) all other Restricted Shares the holders of which
shall have made written request (stating the proposed
method of disposition of such securities by the prospective
Seller) to the Company for the registration thereof within
20 days after giving of such written notice by the Company,
all to the extent requisite to permit the disposition (in
accordance with the proposed methods thereof, as aforesaid,
as long as such proposed methods are consistent with the
original demand) by the prospective Seller or Sellers of
such securities.
(2) The Company's obligation to effect a registration under
this paragraph is subject to the conditions that:
(a) The Executive and his transferees shall not be
entitled to more than a total of (i) one registration
statement on Form S-1 (or some other comparable form of
registration statement) and (ii) two separate registration
statements on Form S-2, S-3 or other comparable short form
of registration statement; provided, however, that no such
Form S-1 or Form S-2, S-3 or comparable short form need be
filed until the earlier of the 90th day after the end of
any fiscal year of the Company or the date on which the
Company's audited financial statements for such fiscal year
are available, nor shall more than one such form be
required to be filed in any 12-month period.
(b) The Company shall not be required to have a
special audit of its financial statements for inclusion in
such Registration Statement: but if the rules and
regulations of the Commission otherwise require such a
special audit, the Company may delay the filing or
effectiveness of the Registration Statement until such time
as the Company receives its audited financial statements
for its then current fiscal year.
(c) The Company shall not be required to effect any
registration in accordance with paragraph 10D(1) hereof if
(i) in the written opinion of counsel to the Company such
registration may not be appropriately effected in light of
any material pending transaction of the Company or its
subsidiaries, or (ii) any registration of any underwritten
public offering of securities made on behalf of the Company
has become effective within ninety (90) days prior to the
anticipated effective date of any registration requested
pursuant to paragraph 10D(1) hereof.
10E. Incidental Registration.
(1) Whenever the Company proposes to file on its
behalf and/or on behalf of any of its security holders a
Registration Statement under the Securities Act on Forms
S-1, S-2 or S-3 (other than in connection with a
registration of securities on Form S-8) (or on any other
form for the general registration of securities to be sold
for cash) with respect to its Common Shares (as defined in
Section 3(a)(11) of the Securities Exchange Act of 1934),
the Company shall give written notice to each holder of
Restricted Securities at least 30 days before the filing
with the Commission of such Registration Statement, which
notice shall set forth the intended method of disposition
of the securities proposed to be registered. The notice
shall offer to include in such filing such number of
Restricted Shares as such holders may request subject to
the limitation in paragraph 10E(2). Each holder desiring to
have Restricted Shares registered under this paragraph 10E
shall (i) advise the Company in writing within 20 days
after the date of receipt of such offer from the Company,
setting forth the number of Restricted Shares for which
12
<PAGE>
registration is requested and the intended method of
disposition thereof, and (ii) deliver to the Company a
letter from counsel to such holder to the effect that
registration under the Securities Act is or may be
required. The Company shall thereupon include in such
filing, subject to the limitation in paragraph 10E(2), the
Restricted Shares proposed to be offered for sale by each
Seller making such request in accordance with its intended
method of disposition as stated in such request, and shall
use its best efforts to effect registration under the
Securities Act of such securities.
(2) The Company shall, as soon as practicable after
the expiration of the 20-day period provided for in
paragraph 10E(1), furnish each Seller with a written
statement from its managing or principal underwriter, if
any, as to the Maximum Includable Shares. If (x) the total
number of Common Shares which the Company proposes to
include in such Registration Statement plus (y) the total
number of Restricted Shares for which registration has been
requested pursuant to paragraph 10E(1) is in excess of the
Maximum Includable Shares, the number of shares (including
Restricted Shares) to be included in such underwritten
offering shall be determined as follows:
(a) No reduction shall be made in the number of shares
to be registered for the account of the Company.
(b) Each Seller of Restricted Shares may include in
the number of Common Shares comprising the balance of the
Maximum Includable Shares that number of Common Shares
determined by multiplying (i) the balance of such Maximum
Includable Shares by (ii) a fraction the numerator of which
shall be the number of Common Shares then owned by such
Seller (adjusted to give effect to exercise of all warrants
and conversion of all convertible securities then owned by
such Seller) and the denominator of which is the number of
Common Shares (as similarly adjusted as to all Sellers)
owned by all Sellers.
10F. General. If and whenever the Company is required by
the provisions of this paragraph 10 to use its best efforts to effect
the registration of any of its securities under the Securities Act,
the Company shall, as expeditiously as possible:
(1) prepare and file with the Commission a Registration
Statement with respect to such securities and use its best efforts to
cause such Registration Statement to become and remain effective;
(2) prepare and file with the Commission such amendments
and supplements to such Registration Statement and the Prospectus
used in connection therewith as may be necessary to keep such
Registration Statement effective for the shorter of 30 days or the
completion of the distribution and to comply with the provisions of
the Securities Act with respect to the disposition of all securities
covered by such Registration Statement in accordance with the
intended method of disposition by the Seller or Sellers thereof set
forth in such Registration Statement for such period;
(3) furnish to each Seller such number of copies of the
Prospectus contained in such Registration Statement (including each
preliminary prospectus), in conformity with the requirements of the
Securities Act, and such other documents as such Seller may
reasonably request in order to facilitate the disposition of the
securities owned by such Seller;
13
<PAGE>
(4) use its best efforts to register or qualify the
Restricted Shares covered by such Registration Statement under the
securities or blue sky laws of such jurisdictions as the Sellers
shall reasonably request, and do any and all other acts and things
which may be necessary or advisable to enable the Sellers to
consummate the disposition in such jurisdictions of such Restricted
Shares during the period provided in paragraph 10F(2); and
(5) (a) notify each Seller of any Restricted Shares covered
by such Registration Statement, at any time when a Prospectus
relating thereto is required to be delivered under the Securities
Act, of the happening of any event as a result of which the
Prospectus contained in such Registration Statement, as then in
effect, includes any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the
circumstances then existing, and (b) at the request of any such
Seller prepare and furnish to such Seller a reasonable number of
copies of any supplement to or amendment of such Prospectus that may
be necessary so that, as thereafter delivered to the purchasers of
such shares, such Prospectus shall not include any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing.
10G. Expenses. If and whenever the Company is required by
the provisions of this paragraph 10 to effect the registration of any
Restricted Shares under the Securities Act, the Company shall pay all
expenses arising out of or related to the preparation, filing,
amendment and supplementing of a Registration Statement, including,
without limitation, all legal and accounting fees, Commission filing
fees, NASD filing fees, printing costs, registration or qualification
fees and expenses to comply with "blue sky" or other state securities
laws, the fees of other experts and any reasonable expenses or other
compensation paid to the underwriters (other than those required by
the next succeeding sentence to be paid by the Sellers). Each Seller
shall be required to bear underwriting commissions and discounts and
transfer taxes, if any, payable in connection with the sale of
Restricted Shares.
10H. Indemnification. In the event of the registration of
any Restricted Shares under the Securities Act pursuant to the
provisions of this paragraph 10, the Company agrees to indemnify and
hold harmless the Seller of such Restricted Shares, each underwriter,
if any, of such Restricted Shares, and each person who controls such
Seller or any such underwriter within the meaning of section 15 of
the Securities Act, from and against any and all losses, claims,
damages or liabilities, joint or several, to which such Seller,
underwriter or controlling person may become subject under the
Securities Act or the common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any
Registration Statement under which such Restricted Shares were
registered under the Securities Act, or any Prospectus or preliminary
prospectus contained therein, or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; and will
reimburse such Seller, each such underwriter, and each such
controlling person for any legal or any other expenses reasonably
incurred by such Seller, underwriter or controlling person in
connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company will
not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission
made in such Registration Statement, such Prospectus or preliminary
prospectus or such amendment or supplement in reliance upon and in
14
<PAGE>
conformity with written information furnished to the Company by such
Seller, underwriter or controlling person specifically for use in
preparation thereof; and provided further, however, that this
indemnity agreement with respect to any preliminary prospectus shall
not inure to the benefit of any such underwriter (or any person who
so controls such underwriter) for any such loss, claim, damage,
liability or action asserted by a person who purchased any Restricted
Shares from such underwriter if a copy of the final Prospectus was
not delivered or given to such person by such underwriter at or prior
to the written confirmation of the sale to such person.
In the event of the registration of any Restricted Shares
under the Securities Act pursuant to the provisions hereof, each
Seller of Restricted Shares agrees to indemnify and hold harmless and
to use its best efforts to cause each underwriter, if any, of such
Restricted Shares and each person who controls such Seller or any
such underwriter within the meaning of section 15 of the Securities
Act, to indemnify and hold harmless the Company, each person who
controls the Company within the meaning of section 15 of the
Securities Act, each of its officers who signs the Registration
Statement, and each director of the Company from and against any and
all losses, claims, damages or liabilities, joint or several, to
which the Company, such controlling person or any such officer or
director may become subject under the Securities Act or the common
law or otherwise, insofar as such losses, claims, damages or
liabilities (or action in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material
fact contained in any Registration Statement under which such
Restricted Shares were registered under the Securities Act, any
Prospectus or preliminary prospectus contained therein, or amendment
or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, which untrue statement or alleged untrue statement or
omission or alleged omission was made therein in reliance upon and in
conformity with, written information furnished to the Company by such
Seller, controlling person or underwriter, specifically for use in
connection with the preparation thereof; and will reimburse the
Company, such controlling person and each such officer and director
for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim,
damage, liability or action.
Promptly after receipt by an indemnified party of notice of
the commencement of any action such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party,
give written notice to such indemnifying party of the commencement
thereof, but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any
indemnified party otherwise than pursuant to the provisions of this
paragraph 10H. In case any such action is brought against any
indemnified party, and it notifies any indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate in, and to the extent that it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying party
will not be liable to such indemnified party for any legal or other
expenses subsequently incurred by such indemnified party in
connection with the defense thereof, other than the reasonable cost
of investigation.
15
<PAGE>
10I. Transferees. In the event that this Warrant or any of
the Restricted Shares purchased upon exercise of this Warrant shall
at any time be transferred by the holder hereof or thereof other than
pursuant to an effective Registration Statement, the rights herein
conferred shall extend to the transferee of such securities.
11. Descriptive Headings and Governing Law. The descriptive headings
of the several paragraphs of this Warrant are inserted for convenience only and
do not constitute a part of this Warrant. This Warrant is being delivered and is
intended to be performed in the State of New York and shall be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the law of such State.
IN WITNESS WHEREOF, LEUCADIA NATIONAL CORPORATION has caused this
Warrant to be signed by its duly authorized officers under its corporate seal,
and this Warrant to be dated May 16, 2000.
LEUCADIA NATIONAL CORPORATION
By:
---------------------------------
ATTEST:
----------------------------
Secretary
16
<PAGE>
SUBSCRIPTION AGREEMENT
Date ,
TO: Leucadia National Corporation
The undersigned, pursuant to the provisions set forth in the within
Warrant, hereby agrees to subscribe for and purchase Common Shares covered by
such Warrant, and makes payment herewith in full therefor at the price per share
provided by such Warrant.
Signature
----------------
Address
-------------------
---------------------------
ASSIGNMENT
FOR VALUE RECEIVED hereby sells, assigns and transfers all of the
rights of the undersigned under the within Warrant, with respect to the number
of Common Shares covered thereby set forth hereinbelow unto:
Name of Assignee Address No. of Shares
---------------- ------- -------------
Dated: ,
Signature
---------------------
Witness
-----------------------
17
<PAGE>
APPENDIX 1
PART III OF ARTICLE FOURTH OF
THE CERTIFICATE OF INCORPORATION OF
LEUCADIA NATIONAL CORPORATION
III. TRANSFER RESTRICTIONS
(a) Certain Definitions. As used in this Part III of Article FOURTH,
the following terms have the following respective meanings:
"Corporation Securities" means (i) shares of common stock of the
Corporation, (ii) shares of preferred stock of the Corporation, (iii) warrants,
rights, or options (within the meaning of Treasury Regulation
ss.1.382-2T(h)(4)(v)) to purchase stock of the Corporation, and (iv) any other
interests that would be treated as "stock" of the Corporation pursuant to
Treasury Regulation ss.1.382-2T(f)(18).
"Percentage Stock Ownership" means percentage stock ownership as
determined in accordance with Treasury Regulation ss.1.382-2T(g), (h), (j), and
(k).
"Five-Percent Shareholder" means a Person or group of Persons that is
identified as a "5-percent shareholder" of the Corporation pursuant to Treasury
Regulation ss.1.382-2T(g)(1).
"Person" means an individual, corporation, estate, trust,
association, company, partnership, joint venture or similar organization.
"Prohibited Transfer" means any purported Transfer of Corporation
Securities to the extent that such Transfer is prohibited and void under this
Part III of Article FOURTH.
"Restriction Release Date" means the earlier of December 31, 2005,
the repeal of Section 382 of the Internal Revenue Code of 1986, as amended (the
"Code") (and any comparable successor provision) ("Section 382"), or the
beginning of a taxable year of the Corporation (or any successor thereof) to
which no Tax Benefits may be carried forward.
"Tax Benefits" means the net operating loss carryovers, capital loss
carryovers, general business credit carryovers, alternative minimum tax credit
carryovers and foreign tax credit carryovers, as well as any "net unrealized
built-in loss" within the meaning of Section 382, of the Corporation or any
direct or indirect subsidiary thereof.
"Transfer" means any direct or indirect sale, transfer, assignment,
conveyance, pledge, or other disposition. A Transfer also shall include the
creation or grant of an option (within the meaning of Treasury Regulation
ss.1.382-2T(h)(4)(v)). A Transfer shall not include an issuance or grant of
Corporation Securities by the Corporation.
"Treasury Regulation ss.1.382-2T" means the temporary income tax
regulations promulgated under Section 382, and any successor regulations.
References to any subsection of such regulations include references to any
successor subsection thereof.
(b) Restrictions. Any attempted Transfer of Corporation Securities
prior to the Restriction Release Date, or any attempted Transfer of Corporation
Securities pursuant to an agreement entered into prior to the Restriction
Release Date, shall be prohibited and void ab initio to the extent that, as a
result of such Transfer (or any series of Transfers of which such Transfer is a
part), either (1) any Person or group of Persons shall become a Five-Percent
<PAGE>
Shareholder, or (2) the Percentage Stock Ownership interest in the Corporation
of any Five-Percent Shareholder shall be increased; provided, however, that
nothing herein contained shall preclude the settlement of any transaction
entered into through the facilities of the New York Stock Exchange, Inc. in the
Corporation Securities.
(c) Certain Exceptions. The restrictions set forth in paragraph (b)
of this Part III of Article FOURTH shall not apply to an attempted Transfer if
the transferor or the transferee obtains the approval of the Board of Directors
of the Corporation. As a condition to granting its approval, the Board of
Directors may, in its discretion, require an opinion of counsel selected by the
Board of Directors that the Transfer shall not result in the application of any
Section 382 limitation on the use of the Tax Benefits.
(d) Treatment of Excess Securities.
(i) No employee or agent of the Corporation shall record any
Prohibited Transfer, and the purported transferee of such a Prohibited Transfer
(the "Purported Transferee") shall not be recognized as a shareholder of the
Corporation for any purpose whatsoever in respect of the Corporation Securities
which are the subject of the Prohibited Transfer (the "Excess Securities").
Until the Excess Securities are acquired by another Person in a Transfer that is
not a Prohibited Transfer, the Purported Transferee shall not be entitled with
respect to such Excess Securities to any rights of shareholders of the
Corporation, including without limitation, the right to vote such Excess
Securities and to receive dividends or distributions, whether liquidating or
otherwise, in respect thereof, if any. Once the Excess Securities have been
acquired in a Transfer that is not a Prohibited Transfer, the Securities shall
cease to be Excess Securities.
(ii) If the Board of Directors determines that a Transfer of
Corporation Securities constitutes a Prohibited Transfer then, upon written
demand by the Corporation, the Purported Transferee shall transfer or cause to
be transferred any certificate or other evidence of ownership of the Excess
Securities within the Purported Transferee's possession or control, together
with any dividends or other distributions that were received by the Purported
Transferee from the Corporation with respect to the Excess Securities
("Prohibited Distributions"), to an agent designated by the Board of Directors
(the "Agent"). The Agent shall thereupon sell to a buyer or buyers, which may
include the Corporation, the Excess Securities transferred to it in one or more
arm's-length transactions (over the New York Stock Exchange, if possible);
provided, however, that the Agent shall effect such sale or sales in an orderly
fashion and shall not be required to effect any such sale within any specific
time frame if, in the Agent's discretion, such sale or sales would disrupt the
market for the Corporation Securities or otherwise would adversely affect the
value of the Corporation Securities. If the Purported Transferee has resold the
Excess Securities before receiving the Corporation's demand to surrender the
Excess Securities to the Agent, the Purported Transferee shall be deemed to have
sold the Excess Securities for the Agent, and shall be required to transfer to
the Agent any Prohibited Distributions and the proceeds of such sale, except to
the extent that the Agent grants written permission to the Purported Transferee
to retain a portion of such sales proceeds not exceeding the amount that the
Purported Transferee would have received from the Agent pursuant to paragraph
(d)(iii) of this Article FOURTH if the Agent rather than the Purported
Transferee had resold the Excess Securities.
(iii) The Agent shall apply any proceeds of a sale by it of Excess
Securities and, if the Purported Transferee had previously resold the Excess
Securities, any amounts received by it from a Purported Transferee, as follows:
(1) first, such amounts shall be paid to the Agent to the extent necessary to
cover its costs and expenses incurred in connection with its duties hereunder;
(2) second, any remaining amounts shall be paid to the Purported Transferee, up
to the amount paid by the Purported Transferee for the Excess Securities (or the
2
<PAGE>
fair market value, calculated on the basis of the closing market price for
Corporation Securities on the day before the Transfer, of the Excess Securities
at the time of the attempted Transfer to the Purported Transferee by gift,
inheritance, or similar Transfer), which amount (or fair market value) shall be
determined in the discretion of the Board of Directors; and (3) third, any
remaining amounts, subject to the limitations imposed by the following proviso,
shall be paid to the Leucadia Foundation; provided, however, that (i) if the
Leucadia Foundation shall have terminated prior to its receipt of such amounts,
such remaining amounts shall be paid to one or more organizations qualifying
under Section 501(c)(3) of the Code (and any comparable successor provision)
("Section 501(c)(3)") selected by the Board of Directors, and (ii) if the Excess
Securities (including any Excess Securities arising from a previous Prohibited
Transfer not sold by the Agent in a prior sale or sales), represent a 5% or
greater Percentage Stock Ownership interest in any class of Corporation
Securities, then any such remaining amounts to the extent attributable to the
disposition of the portion of such Excess Securities exceeding a 4.99 Percentage
Stock Ownership interest in such class shall be paid to one or more
organizations qualifying under Section 501(c)(3) selected by the Board of
Directors. The recourse of any Purported Transferee in respect of any Prohibited
Transfer shall be limited to the amount payable to the Purported Transferee
pursuant to clause (2) of the preceding sentence. In no event shall the proceeds
of any sale of Excess Securities pursuant to this Part III of Article FOURTH
inure to the benefit of the Corporation.
(iv) If the Purported Transferee fails to surrender the Excess
Securities or the proceeds of a sale thereof to the Agent within thirty business
days from the date on which the Corporation makes a demand pursuant to paragraph
(d)(ii) of this Article, then the Corporation shall institute legal proceedings
to compel the surrender.
(v) The Corporation shall make the demand described in paragraph
(d)(ii) of this Part III of Article FOURTH within thirty days of the date on
which the Board of Directors determines that the attempted Transfer would result
in Excess Securities; provided, however, that if the Corporation makes such
demand at a later date, the provisions of this Part III of Article FOURTH shall
apply nonetheless.
(e) Bylaws, Legends, Etc.
(i) The Bylaws of the Corporation shall make appropriate provisions
to effectuate the requirements of this Part III of Article FOURTH.
(ii) All certificates representing Corporation Securities issued
after the effectiveness of this Part III of Article FOURTH shall bear a
conspicuous legend as follows:
THE TRANSFER OF THE SECURITIES REPRESENTED HEREBY IS
SUBJECT TO RESTRICTIONS PURSUANT TO PART III OF ARTICLE
FOURTH OF THE CERTIFICATE OF INCORPORATION OF LEUCADIA
NATIONAL CORPORATION REPRINTED IN ITS ENTIRETY ON THE BACK
OF THIS CERTIFICATE.
(iii) The Board of Directors of the Corporation shall have the power
to determine all matters necessary to determine compliance with this Part III of
Article FOURTH, including without limitation (1) whether a new Five-Percent
Shareholder would be required to be identified in certain circumstances, (2)
whether a Transfer is a Prohibited Transfer, (3) the Percentage Stock Ownership
in the Corporation of any Five-Percent Shareholder, (4) whether an instrument
constitutes a Corporation Security, (5) the amount (or fair market value) due to
a Purported Transferee pursuant to clause (2) of paragraph (d)(iii) of this Part
3
<PAGE>
III of Article FOURTH, and (6) any other matters which the Board of Directors
determines to be relevant; and the good faith determination of the Board of
Directors on such matters shall be conclusive and binding for all the purposes
of this Part III of Article FOURTH.
4
